Despite many reports today claiming Smith is in talks with the Old Trafford club, his agent Alex Black has so far refused to comment.
Chairman Gerald Krasner said: "We are not discussing specific deals until they have been concluded, but we are talking to lots of people about lots of deals."
Later reports suggested that Leeds had rejected two offers from Manchester United, a bid of £3.5m and an improved bid of £5.5m.
As Leeds value Smith at £10m, it is now understood Liverpool are now prepared to step in.
A Leeds spokesman said: "The offers by Manchester United substantially undervalue Alan Smith's position as a top Premiership player. He is worth far more than what Manchester United are prepared to pay for him. Both offers were rejected immediately."
Kevin Blackwell told the official Leeds website Smith should not be criticised, whatever he chooses to do with his career.
"Leeds and Manchester United fans are not the best of friends, but Alan has got to move on," Blackwell said. "I am sure the fans respect what he has to do. If things had been different Alan would not be leaving. I don't think the lad deserves any criticism whatsoever for what he has done."
Blackwell added: "Alan can go with his head held high because he has never let this club down. He was just unfortunate that feelings are running very high."